IDENTIFYING CRYPTO INVESTMENTS
We invest to make a return on the money invested so let's discuss how we do that on ICO picks.
What is my goal?
The goal of making an investment should be to get a positive return on the medium of exchange that you value most.
If that is USD then you need to get a better return than inflation and/or any interest rates that you are paying due to borrowing
If that is a cryptoasset or cryptocurrency then that is dependant on the economic model of it.
Ex: I value Bitcoin more than I do the USD because of its ‘decentralized’ network, the size of the network, the growth of the network, the acclaim that it has, the amount of open source development on it, the security that it provides, and the limited supply. So I want my investments to increase in the value of Bitcoin.
Once your personal goal of a base return is found you need to identify the risk that are ok with and then create techniques to reduce it.
How do I determine risk?
Simply put you need to know how much you can afford to lose and how to reduce risk to not lose anything
A way to find how much you can lose is to know how much you make each year and subtract that from expenses. Expenses being, necessities, and cost of the lifestyle that you chose to live. That will give you an Idea of how much you can lose.
If that number is negative, then create larger revenue streams or cut off unnecessary expenses until that number is positive .
If that number is positive then that is amount that you can afford to lose.
Ok great, I have excess funds now! This Bitconnect thing looks promising should I invest?
No, we are not done with risk.
After you know what you can lose, you need to know what you are investing in.
Identify what the use case is, who is building it, what their skills are, who is already supporting them, the magnitude of the project, and the correlation to all of the qualitative features to the industry trying to be seized.
These each have values tied to them and weighted in terms of importance because some become more important than others when it comes to return.
Some can be quite misleading when it comes to return as well.
Ex 1: Project is trying to bring all the moving parts of real estate onto a blockchain and the CEO is a professional race car driver and the development team has no blockchain coding background instead are all professional LoL players. The partnerships are the National Football League, and the Ex-POTUS Bill Clinton is investing.
Ex 2: Project is trying to bring all the moving parts of real estate onto a blockchain and the CEO is a macro economist with a New York Times bestseller on Real Estate investment, a long list of successful real estate investments and the development team has blockchain coding background and worked at NASA, IBM, Intel, and Amazon. The partnerships are the National Real Estate Investors Association and they are invested in by Jeff Bezos
So (Ex 1) has an excellent use case, the builders are very accomplished in their lines of work, they have exceptional computer skills, the NFL is a huge corporation with millions of weekly viewers, Bill Clinton has a name with a lot of acclaim, the magnitude grabs a huge industry with tons of volume and moving parts, But none of the qualitative features line up with the industry being seized.
SO THIS IS VERY HIGH RISK.
While (Ex 2) differs in skill set and correlation to match what is needed to seize target market so the project has LOWER RISK.
I think I get it; now tell me about Xtrade.
XTRADE
Xtrade is bridging the gap between institutional investors and cryptocurrency.
They are building solutions to the problems that cryptocurrencies have and leveraging the technology to provide new services to investors that the old stock, FOREX, and commodities markets could not provide.
The services they plan to initially offer are dark pools, global API, downloadable platform to execute trades on, and liquidity aggregation across all exchanges.
Dark pools are enabling large transactions to happen from fiat to crypto with a reduced fee from 12% to 1%. This allows them to take hold of the OTC markets and allow for whales to move in and out of crypto easier and a lot cheaper.
Global API allows for you to consolidate all tracking of markets to Xtrade. This is beneficial for crypto algo traders who are plugged in to all exchanges API’s. They can now just use Xtrade to plug into
A downloadable platform to execute trades on will be beneficial for account holders of all exchanges who want to only have to hold one account but participate on all exchanges.
Liquidity aggregation is giving users the ability to fill orders across all exchanges. Consolidating exchanges into one order book.
The goal that Xtrade is trying to reach is a 1-stop shop for all things crypto.
Gaining access to all of these products can only be done via the Xtrade Token. The utility of the token will be to give discounts on exchange fees for all of the products.
PROS
The team behind Xtrade, is experienced in all sides of the industries required to make this project work: FinTech, Trading, and Exchange creation.
This is a project that if successful could clock a lot of traffic meaning the value of token will rise. To look at some similar exchange tokens look at Kucoin Shares, and Binance Coin. Binance coin up 80x from incepton and Kucoin Shares up roughly 10x; in terms of USD.
In order to bring this traffic you will need the partnerships with large institutions to bring it.
The partnerships with CME Group and CEX could be all that is necessary to bring large volume.
To already have a sured up partnership with these two institutions gives Xtrade a nice testbed to prove usability to then show a back record to other exchanges.
What is left for Xtrade is the execution.
CONS
While Xtrade stacks up nicely to most projects in the crypto space there are some problems that I see with this project mainly execution ability but that ties in with SEC, and competition as well.
In order to execute the plan of action that Xtrade has they first need the institutions to truly be on board with what they are building. This will stress on how tight partnerships truly are and what is the extent of the partnership that they have.
They are probably contingent on regulatory compliance, shipping a product, shipping a product that is usable to the liking of the CME/other institutional user, and superior to the competition that is offered to the CME.
This means that the CME partnership is more like a handshake that we will checkout what you are building; like nearly all crypto ‘partnerships’.
So in order to actually bring on a large institution they will need to build something the is patent protected and offers superior usability to other products that could work around them.
Another problem that I see which ties into execution is the SEC. While they claim utility it could be classified by the SEC as not a utility therefore requiring Xtrade to be regulated as a security which would take extended time and affect partnerships etc.
To harp on partnerships some more in order for all of this consolidation to truly be beneficial you would have to get get partnerships from all of the exchanges to truly capitalize on anomalies.
The competition that is being built against Xtrade is top notch. Projects like QASH, BCT, and Cryptalgo all bring stiff competition to compete against but regionally not much is being built in the forefront that competes with Xtrades region; geographically speaking.
A competitive analysis will be made in the future that dives deeper into this.
CONCLUSION
Xtrade has a large upside that needs execution to actualize as sustainable profit on the charts.
I think the team has the chops to do what they set out to do but there are many hurdles that lay ahead for them to avoid
I personally am behind this project and am excited to see what is in store for them.
Stream of consciousness’d this out will be improving as writings come out further
NEXT COIN REVIEW
Will be doing a review on Cryptalgo
Thanks steemians,
MW